Who to believe when 2 opposing views miss the point about VC funding?

StartUpSmart published an article recently about the state of VC in Australia, and called out TechCrunch on some key data. 

http://www.startupsmart.com.au/financing-a-business/venture-capital/techcrunch-calls-out-australias-venture-capital-issues-investors-respond/2014042312147.html

However, I think both groups miss the point. As i highlighted in the (improved) comments.

 

"Its a interesting fact that Australian startups are seeking funding from overseas (typically the US) even at an earlier stage. Is it because Australia is not prepared to invest in Australian companies?

According to the last year's PWC report, the total amount invested in early stage startups in 2012 was $53m, and credible sources put the amount 2013 figure at 25% less, or $40m. 

The astounding fact is that there's a majority of founders, possibly 1200-1500,  (>80% of total new digital) startups pitching for this very small pool of funds.

Does this make you wonder why?

Perhaps its because investors know something that VCs, or us as founders, don't. Startups in Australia have yet to tap into our core strengths in the markets in which we have so much domain expertise. 

I hear so often that we should try and become more like silicon valley. With a (relativity) small consumer economy, we punch well above our weight (in GDP terms) in B2B/B2E. Eg mining, agriculture, manufacturing, healthcare, services, forestry, distribution (the list is very large) etc, yet we as a startup eceosystem, are all still focussed on building and finding 'unicorns' in consumer markets.

And we have at least 2 of the largest untapped funding pools available in the world. 

When we (startups) start building in sectors in which we can hold our own, funders (high net worth individuals, wholesale & retail funds, corporate investors and overseas investors alike) will flood the market with fiscal 'solutions'. 

I say that the fault is not one of funding, but of our own making, by not creating truly fundable opportunities.

As founders, we need to look to our areas of expertise, and hold our ground with conviction, when pitching these new ideas, instead of bending in the direction of every new breeze that blows. 

Instead of looking without, we should first be looking within."

Startup funding is everywhere

One of the most frequent problems that I hear from startup founders, and potential founders, is that they have no idea where they will find the money to quit their job, in order to build their 'great idea'.

And yet founders often ignore the single most important (and cheapest) sources of funding. Customers. 

Customers are also their most valuable type of validation. Forget metrics that don't matter, like pageviews, likes, or hits. It's paying customers. 

How many people have you spoken to this week that might be prepared to value what you do, enough to put down some coin?

Perhaps a better question is "Do you know where your customers are?"

They are everywhere, if you would but open your mouth. 

I had just finished the evening dinner with my co-founder, and another great successful startup team, preparing and backgrounding for our new 'Rising Startups' podcast series. 

After changing trains, I get talking with another in-transit passenger, 'Claude', who tells me that after finishing a 12 hour shift on his last day at work, he didn't even get so much as a thank you. 

(Can you imagine working for a company for 1825 days, and not even getting a 'thank-you'? Actually, perhaps you can.)

So I asked 'Claude' what he had done up until today for the last 5 years, and he proceeded to tell me for the next 6 or 7 minutes, including the fact that he & friend had a great idea for a business in his area of expertise, that he had always wanted to do. 

He stopped, and asked what I did. 

So did I fumble my lines, give him a wishy-washy answer, or give him some long diatribe?

No. I simply gave him the answer that I give to anyone, delivered naturally & openly. "We run a venture accelerator for experienced professionals with deep experience, who have a great idea, and aren't sure what to do next", was my reply. 

Measured, relaxed and authentic. Which by the way, is exactly how you should deliver yours too. 

His response was enthusiastically simple "have you got a card?"

Validation.

So if you want more funding than you can handle, do these four simple things, everyday.

1/ know your lines

2/ rehearse delivering them daily

3/ know what is important to your customers, and

4/ open your mouth